Management Information For Today's Agricultural Business

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Month: October 2015

Recently there have been several articles in the media discussing the lack of projected income for corn and soybean farmers due to low prices and input costs remaining stable at higher prices. This scenario can result in farming losses and financial stress for farm families. OSU Extension is offering a Farm Business and Finance Webinar Series aimed at helping farm families improve financial management knowledge.

This free educational 4-session webinar series is funded by the North Central Extension Risk Management Education Grant titled: Ready, Set, Go: Preparing Farms to Successfully Manage Risk. The webinars will be held on Mondays from 11:30 am to 1:30 pm starting November 16, 2015 through December 7, 2015. Participants can login from their home or office computer to access the webinar. The sessions will cover the following topics:

Session 1 – Farm Business Planning and Systems Management

Is the operation large enough and profitable enough to provide family living draw?

Is the business plan built on economic considerations?

Is there an adequate system for obtaining management information and monitoring business performance?

Session 2 – Introduction to Financial Statement

Balance sheet – a summary of all the assets and liability of the business at one point in time.

Income statement – reflects the profitability over a period of time.

Statement of cash flows – reconciles the beginning and ending cash on the balance sheet.

Repayment Capacity – do I have the ability to repay the loan on the next farm?

Financial Efficiency – am I using my money to its fullest potential?

Session 4 – Using Financial Data to Drive Decisions

Determining risk capacity of the business

Capital improvement plan (short and long term)

Individual enterprise analysis to determine profitable enterprises

Decision time using case farms

Farm business owners, interested in this free webinar, can register by clicking http://go.osu.edu/farmwebsurvey. For additional information contact Chris Bruynis at bruynis.1@osu.edu or by calling 740-702-3200.

Those registered by Thursday, November 12th will receive the login information and course material on Friday November 13th by email.

One piece of business that can be taken care of in the fall after harvest is completed is securing a cropland lease or rental agreement for the 2016 season. The purpose of this article is not to talk about what that rental price is, but rather the format of that agreement and lease/rental conditions included in that agreement.

A surprising number of cropland rental or lease agreements are nothing more than a verbal agreement. If you ask any agricultural law attorney they will tell you that lease agreements should be put in writing. According to Ohio’s “Statute of Frauds” a lease needs to be in writing and signed to be enforceable in a court of law. Of course very few, if any, persons enter a lease agreement intending to end up in court and many verbal agreements do work to the satisfaction of both parties. There are good reasons to put lease agreements in writing beyond the question of legal enforceability.

A written agreement reduces risk and supplies certainty. The rental price per acre is just one part of a lease agreement. A written agreement should also lay out other important provisions such as the duration of the lease, when and how a lease is renewed, termination notice, payment provisions, conservation practices, can the tenant apply fall inputs, property maintenance, and dealing with improvements such as tiling. Some other questions that can be considered in a written lease include:

Does property transfer terminate the lease?

Does the death of either party terminate the lease?

Can a tenant recoup expenses for tillage, nutrients, seed, cover crops or even a portion of a hay crop if those expenses were incurred before the landowner terminates the lease?

Some of these questions are not easy questions to ask or to consider, but they are questions developed from real life examples that caused disputes, and in some cases, legal action. It is easier to ask these questions and work through terms in a written agreement beforehand than relying upon good will and cooler heads to prevail when these situations arise.

The basic components of a legal, written lease agreement include a legal description, address and acreage of the land parcel, signature of all landowners and the tenant, any lease over 3 years must be acknowledged, preferably with a notary or official to certify signatures, and finally, the lease must be recorded in the county where the land exists. Ohio law does allow lease parties to file a shortened, “memorandum of lease” that only requires the names and addresses of the agreement parties, a legal description of the land, lease period and rights of renewal without having to reveal any other details or provisions of the lease.

Written lease agreements protect both the landowner and the tenant, remove the burden of trusting our memories, clarify terms and conditions and may prevent legal and relationship problems from arising. Resources and examples of written farm leases can be found on the North Central Farm Management Extension web site at: http://aglease101.org/ . For more information about cropland leases contact a member of the OSU Extension Ag Manager team; a team directory can be found on the web site at: http://ohioagmanager.osu.edu/ .

COLUMBUS, Ohio – Farmers, farm representatives and rural landowners can learn more about the special issues with farm tax returns during a daylong tax webinar and workshop Dec. 14 hosted by the College of Food, Agricultural, and Environmental Sciences at The Ohio State University

Topics such as inherited property and income tax on farm transfers will be discussed during the workshop, which focuses on issues specific to farm tax returns related to agriculture and natural resources, said Larry Gearhardt, director of the Ohio State University Income Tax School Program of Ohio State University Extension. OSU Extension is the statewide outreach arm of the college.

The six-hour program, which will be presented in a live webinar format, is open to tax preparers as well as individuals who file their own farm taxes, Gearhardt said.

The program, which is an intermediate-level course, will focus on the changes in tax laws, in particular those that deal with agriculture like Section 179 expense deductions and bonus depreciation, he said.

“Right now we are in a holding pattern waiting to see if Congress takes any action on making changes to this section,” Gearhardt said.

Other topics to be discussed during the webinar include:

Repair regulations.

Farmer net investment income tax issues.

Commodity credit corporation loans.

Livestock transaction.

The cost for the one-day school is $130, and organizers have applied for continuing education credits for the course, Gearhardt said. More information on the workshop, including how to register, can be found at go.osu.edu/taxschools. Participants can contact Gearhardt at 614-292-2433 or gearhardt.5@osu.edu for more information.

Registration includes the Agricultural Tax Issues Book. The deadline to register is Nov. 23 in order to ensure participants can get the manual via mail in time for the workshop. The live webinar, which will also feature a real-time Q-and-A, can be viewed at several host locations statewide and will include lunch. Participants also have the option to view the webinar from home if they aren’t able to attend a host location, he said.

For those who choose not to attend the host location, a web address for the webinar will be sent to those who have registered a week in advance of the Dec. 14 presentation, Gearhardt said. Participants must be registered before Nov. 23 to ensure receipt of the tax issues workbook by mail before the webinar, he said.

COLUMBUS, Ohio – Provisions of the Affordable Care Act will again be the big issue this year for taxpayers – but instead of the focus being heavy on individual taxpayers, more interest will be on employer reporting requirements, a tax expert with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University said.

To help experienced tax preparers learn about federal tax law changes and updates for this year as well as learn more about issues they may encounter when filing individual and small business 2015 tax returns, the college is offering a series of two-day income tax schools.

The tax school will also offer information on preparing taxes that focus on agriculture concerns, said Larry Gearhardt, director of the Ohio State University Income Tax School Program of Ohio State University Extension. OSU Extension is the statewide outreach arm of the college.

“The school is an excellent value that will be taught by tax experts with a goal to bring participants up to speed on the latest developments and changes in tax laws that will impact this year’s tax returns,” he said.

The OSU Income Tax Schools are an intermediate-level course that focuses on interpreting tax regulations and changes in tax laws to help tax preparers, accountants, financial planners and attorneys advise their clients.

Participants will receive the 2015 National Income Tax Workbook prepared by the Land Grant University Tax Education Foundation for the tax schools held in Ohio and 30 other states.

The tax school will also feature a separate webinar on ethics that will broadcast Dec. 16 at 1 p.m. and Dec. 18 at 10 a.m. The webinar is approved by the IRS for two hours of continuing education credits and will be available to tax school participants enrolled in the two-day tax school at no extra charge, Gearhardt said.

The preregistration fee for each workshop is $340, with late registration $390. The fee includes all materials, lunches and refreshments. The deadline to enroll is 10 business days prior to the date of each school. Participants can also choose to attend just day 1 or day 2 for $210.

The schools run from 8 a.m. to 5 p.m. on the following dates and locations:

Extension has scheduled three seminars in Ohio for Agricultural Lenders. The dates are Monday, October 26th at the OSU Extension Champaign County Community Center Auditorium in Urbana, Ohio; Monday, November 2nd at the Putnam County Educational Service Center in Ottawa, Ohio; and Tuesday, November 3rd at the OARDC Fisher Auditorium in Wooster, Ohio. These seminars are excellent professional development opportunities for Lenders, Farm Service Agency personnel, county Extension Educators and others to learn about OSU Extension research, outreach programs and current agricultural topics of interest across the state.

Topics and Speakers at all 2015 Seminars:

Land Values, Cash Rents, Crop Input Costs and Potential Crop Profitability in 2016, by Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics, The Ohio State University

Current Agricultural Law Topics: Lease Enforceability and Termination, Nuisance Laws, etc, by Peggy Hall, J.D., Ohio State University Extension, Field Specialist, Agricultural & Resource Law

The registration cost to attend one of the Ag Lender Seminars is $65.00 and the registration deadline is one week prior to the seminar you are attending. Payments can be made by check by mail or by credit card (by phone only to 419-782-4771). Registration forms are available online at: http://defiance.osu.edu/events/ag-lender-seminars-scheduled

Registration questions can be directed to OSU Extension Defiance County 419-782-4771 or email clevenger.10@osu.edu

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